Accounting for share Capital Test

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Accounting for share Capital Test - 11

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Weekly Quiz Competition

Question 1
1 / -0

A sends goods to B of Delhi, the goods are to be sold at 125% of cost which is invoice price. Commission is 10% on sales at invoice price and 25% of any surplus realized above IP. 10% of the goods sent out on consignment, invoice value of which is Rs 12,500, were destroyed. 75% of the total consignment is sold by B at Rs 1,00,000. What will be the amount of commission payable to B?

A
Rs 10,937-50

B
Rs 16,250

C
Rs 10,000

D
Rs 9,700
Question 2
1 / -0

While making an adjusting entry in respect of interest on capital, we credit __________________.

A
Interest on capital account

B
Capital account

C
Profit and loss account

D
Drawing account

Solution

interest can be paid on the proprietor's funds/capital also. It is treated like any other expense and is debited to the Profit and Loss Account and credited to the capital Account.
Question 3
1 / -0

A company has issued $$15,000$$ shares of $$Rs. 10$$ each. The amount has been demanded as under:
On Application - $$Rs. 3$$. On Allotment - $$Re. 1$$
On $$1st$$ Call - $$Rs. 4$$. On $$2nd$$ and Final Call - $$Rs. 2$$.
A shareholder holding $$500$$ shares did not pay $$1st$$ and $$2nd$$ call money. His shares have been forfeited. These shares have been reissued @ $$Rs. 9$$. The amount transferred to Capital Reserve is

A
$$Rs. 1,000$$

B
$$Rs. 1,500$$

C
$$Rs. 3,000$$

D
$$Rs. 2,000$$

Solution

Amount received on forfeited shares $$(500\times 4) = Rs. 2,000$$ will be credited to shares forfeited account on forfeiture of shares. Out of this $$Rs. 500$$ will be debited to share forfeiture account being discount on reissue of these shares. Balance of share forfeited account $$(2000 - 500) = Rs. 1,500$$ will be transferred to Capital Reserve. Therefore, correct answer is B.
Question 4
1 / -0

The balance in the deceased partner's capital account is transferred to the _________capital account.

A
Solvent Partners

B
Insolvent Partners

C
Representative of Deceased Partner

D
New Partners

Solution

On the death of a partner, the partnership ceases to exist. But the firm may not cease to exist as the other remaining partners may decide to continue the business. In case of death of a partner, the treatment of various items is similar to that at the time of retirement of the partner. After making all the adjustments in the partners capital account, the amount that is due to him is paid to his legal representative.
Question 5
1 / -0

A and B enter into a joint venture to underwrite shares of K Ltd. K Ltd. make an equity issue of 100,000 equity shares. 80% of the shares underwritten by the venturer. 80,000 shares are subscribed by the public. How many shares are to be subscribed by the venture?

A
Nil

B
16,000

C
18,000

D
None

Solution

Here,
An equity issue of 1,00,000 equity share which are 80% of the share underwritten by the venturer. And, 80,000 share are subscribed by the public, hence, 20% share are remaining, so, 80,000 x 20% = 16,000 are to be subscribed by the venture.
Question 6
1 / -0

Share Application Account is in the nature of ______________.

A
nominal account

B
personal account

C
real account

D
none of these

Solution

Share Application or share allotment or Share capital A/c all are personal accounts as they represent money from the shareholders and when money is due, these are to be debited because of the rule "Debit the receiver".
Question 7
1 / -0

A company can not issue following kinds of shares _____________.

A
Redeemable equity shares

B
Irredeemable preference shares

C
Equity shares with differential voting rights

D
Redeemable preference shares

Solution

An Irredeemable preference share is a kind of preference share which have no maturity period to be redeemed. Means the investors of such shares will not get their capital back. so as the companies Act, 2013 does not allow any company to issue irredeemable preference shares.
Question 8
1 / -0

Which of the following is incorrect as to a share?

A
It has a nominal value

B
It has a distinct number

C
It may be transferred in fractions

D
All shares of a class are of equal denominations
Question 9
1 / -0

Share or Security Premium can be used for writing off _____________.

A
loss on sale of assets

B

preliminary expenses

C
bad debts

D
both B and C

Solution

As per section $$52(2)$$ of the Companies Act, $$2013$$, Share or Security Premium can be used for writing off Preliminary Expenses. It cannot be used either for writing off loss on sale assets or bad debts. Therefore, correct answer is B.
Question 10
1 / -0

Which of the following statements is false?

A
Shares can be issued for cash or for any other consideration.

B
In the event of over-subscription, excess amount of application has to be either refunded or a pro-rata allotment is made.

C
SEBI guideline are applicable for issue of shares.

D
The share application money is automatically converted to share capital.

Solution

Accordingly, the payment of interest on such share application money that had been utilised for business purposes was a revenue was actually converted into share capital by allotment. The taxpayer relied on the.

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Accounting for share Capital Test - 11

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Accounting for share Capital Test - 11

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SHARING IS CARING

Question 1

Rs 10,937-50

Rs 16,250

Rs 10,000

Rs 9,700

Question 2

Interest on capital account

Capital account

Profit and loss account

Drawing account

Solution

Question 3

$$Rs. 1,000$$

$$Rs. 1,500$$

$$Rs. 3,000$$

$$Rs. 2,000$$

Solution

Question 4

Solvent Partners

Insolvent Partners

Representative of Deceased Partner

New Partners

Solution

Question 5

Nil

16,000

18,000

None

Solution

Question 6

nominal account

personal account

real account

none of these

Solution

Question 7

Redeemable equity shares

Irredeemable preference shares

Equity shares with differential voting rights

Redeemable preference shares

Solution

Question 8

It has a nominal value

It has a distinct number

It may be transferred in fractions

All shares of a class are of equal denominations

Question 9

loss on sale of assets

preliminary expenses

bad debts

both B and C

Solution

Question 10

Shares can be issued for cash or for any other consideration.

In the event of over-subscription, excess amount of application has to be either refunded or a pro-rata allotment is made.

SEBI guideline are applicable for issue of shares.

The share application money is automatically converted to share capital.

Solution

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